Social Security, Medicare and Disability. Debra Wood, MS, CFP Certified SHICK Counselor Central Kansas District Extension Agent

Transcription

1 Social Security, Medicare and Disability Debra Wood, MS, CFP Certified SHICK Counselor Central Kansas District Extension Agent

2 Social Security and Medicare Tax deducted from paycheck: Social Security (Old Age, Survivors, and Disability Insurance): Employers and Employees each 6.2% Medicare: Employers and Employees each 1.45% Self employed pay both halves (15.3%) 2017 Maximum taxable earnings is $127,200 for Social Security

3 Eligibility to Receive Benefits Earn up to 4 credits per year (1 per each $1300 in wages to a max of 4/year in 2017) Retirement & Medicare: Earned 40 credits Disability: Meet definition of disability AND have worked long enough, and recently enough to qualify Survivors: Younger you are, fewer credits you need. No one needs more than 40 credits.

4 Benefits Eligibility When you You Your Spouse or Unmarried Ex Spouse* Retire Age 62 or over Age 62 or over Any age, if caring for your child under 16 or disabled before 22 Become Disabled Any age before full retirement age (FRA) Age 62 or over Any age, if caring for your child age 16 or disabled before 22 Die Age 60 or over, or if disabled Any age, if caring for your child age 16 or disabled before 22 *For your spouse to be able to collect benefits on your record, you must first file for benefits. Your ex spouse does not have to wait for you to file as long as you ve been divorced 2 or more years. Your Unmarried Child Under 18, or up to 19 if in high school; any age if disabled before 22 Under 18, or up to 19 if in high school; any age if disabled before 22 Under 18, or up to 19 if in high school; any age if disabled before 22

5 When is your full retirement age (FRA)? If you were born in: Your full retirement age is: Benefit Reduction at % and 2 months 25.83% and 4 months 26.67% and 6 months 27.5% and 8 months 28.33% and 10 months 29.17% 1960 and later %

6 Why is FRA Important? Monthly benefit amounts are reduced if taken before FRA and increased after FRA (minimum age to file for benefits is 62) The amount received when one first gets benefits sets the base for the amount that will be received for the rest of lifetime. Earnings Limit no longer applies Benefits may be reduced if collected prior to FRA, until they reach FRA (Slide 12)

7 Your Age at the Time You Elect Retirement Benefits Affects the Amount Monthly Benefit $750 $800 $866 $933 $1,000 $1,080 $1,160 $1,240 $1,320 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Monthly Benefit Maria s benefit is $1,000 at her full retirement age of 66

8 my Social Security Your Online Account... Your Control... my my Social Security is an easy to access, easy to use portal to view and update some of your own Social Security information.

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10 How Social Security Determines Your Benefit Social Security benefits are based on earnings Step 1 Your wages are adjusted for changes in wage levels over time Step 2 Find the monthly average of your 35 highest earnings years Step 3 Result is average indexed monthly earnings 25

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12 You Can Work & Still Receive Benefits If You Are Under Full Retirement Age The Year Full Retirement Age is Reached Month of Full Retirement Age and Above You Can Make Up To $ 16,920/yr. ( $ 1,410/mo.) $ 44,880/yr. ( $ 3,740/mo.) No Limit If You Make More, Some Benefits Will Be Withheld $ 1 for every $ 2 $ 1 for every $ 3 No Limit Note: If some of your retirement benefits are withheld because of your earnings, your benefits will be increased starting at your full retirement age to take into account those months in which benefits were withheld.

13 Provisional Income and Taxation Social Security retirement benefits are taxed if total Provisional Income is above certain thresholds Calculate Preliminary AGI: wages, pension dollars, dividends, realized capital gains, taxable interest from investments, annuities, rental income and other sources. Add tax exempt interest (if any) plus 50% of Social Security benefits this is your Provisional Income. Single or Head of Household Married, Filing Jointly Taxable % $25,000 or less $32,000 or less Not Taxed $25,000 $34,000 $32,000 $44,400 Up to 50% Taxable Above $34,000 Above $44,000 Up to 85% Taxable

14 Spouse s Benefit Computation Retirement benefit is 50% of worker s unreduced benefit Reduction for early retirement If spouse s own benefit is less than 50% of the worker s, they get their benefit first, then additional amount to equal 50% of worker s amount Does not reduce payment to worker At FRA 100% of deceased worker s benefit

15 Ex Spouse Marriage lasted 10 years You are unmarried You are age 62 or older Ex spouse is entitled to receive benefits If ex spouse is not drawing benefits, must be entitled to them, and you must have been divorced at least two years

16 Disability and SSI Must meet Social Security definition of disabled Medical condition is expected to last at least one year or result in death Recent work test & Duration of work test Supplemental Security Income Income and resource limits Age 65; blind; disabled

17 Disability Recent Work Test If you become disabled In or before the quarter you turn age 24 In the quarter after you turn age 24 but before the quarter you turn age 31 In the quarter you turn age 31 or later Then you generally need: 1.5 years of work during the three year period ending with the quarter your disability began. Work during half the time for the period beginning with the quarter after you turned 21 and ending with the quarter you became disabled. Example: If you become disabled in the quarter you turned age 27, then you would need three years of work out of the six year period ending with the quarter you became disabled. Work during five years out of the 10 year period ending with the quarter your disability began.

18 Duration of Work Test If you become disabled Then you generally need: Before age 28 Age 30 Age 34 Age 38 Age 42 Age 44 Age 46 Age 48 Age 50 Age 52 Age 54 Age 56 Age 58 Age years of work 2 years 3 years 4 years 5 years 5.5 years 6 years 6.5 years 7 years 7.5 years 8 years 8.5 years 9 years 9.5 years

19 Survivor Widow/Widower Full benefit at full retirement age Reduced at age 60, or age 50 and disabled Any age if caring for a child younger than 16 Unmarried children Dependent parents if they are 62+ and you provide at least half of their support (qualified dependent on your taxes)

20 Family Children s benefits Unmarried Younger than 18 (19 if full time student grade 12 or under) 18 or older and disabled before age 22 Apply with retirement, disability and survivor s benefits

21 Medicare Eligibility is still age 65 May delay enrollment without penalty under certain circumstances if you or spouse has employer coverage from active employment, depending on number of employees 40 credits for premium free Part A 4 parts to Medicare, premium for Parts B, C, D and Supplement plans Refer to SHICK Counselor

22 Medicare and the Health Insurance Marketplace If clients retire prior to age 65, can enroll in a Marketplace plan before Medicare coverage begins No longer eligible for premium tax credits once enrolled in Medicare May have a late enrollment penalty for as long as they have Medicare if they do not enroll during their Initial Enrollment Period

23 Income Related Monthly Adjustment Amount (IRMAA)

24 Need Help Paying for Prescription Drugs & Premiums? Low Income Subsidy (LIS) Apply to Social Security any time On line or pen & paper 2017 Income guidelines $18,090 annual income or $1,508 per month (single) $24,360 annual income or $2,030 per month (couple) Assets/resources guidelines $13,820 (single) $27,600 (couple) Includes savings, CD, real estate, stocks/bonds, value of insurance policies, etc. Receive letter of acceptance or denial Reduced cost for premium & drugs

25 Replacing SSN on Medicare Cards Beginning April 2018 new Medicare cards with Medicare Beneficiary Identifier (MBI) Transition period from April 1, 2018 through December 31, 2019 where either card/number can be used New numbers will be 11 characters in length and made up of numbers and uppercase letters Update address with Social Security Administration

26 Extension offices with SHICK Counselors

27 ACA Navigators Erin Petersilie, Walnut Creek District Joy Miller, Southwind District Susie Latta, Marshall County Call (Kansas only) Visit coverks.org Enrollment Period November 1 December 15 Overlaps with Medicare Open Enrollment

28 Resources Social Security Benefit verification letters Change address and phone number Start or change direct deposits MEDICARE or

29 Social Security Publications How to Create an Online Account How You Earn Credits Understanding the Benefits Retirement Benefits Disability Benefits Understanding Survivor's Benefits When to Start Receive Retirement Benefits Retirement Info. for Medicare Beneficiaries Medicare What Every Woman Should Know

30 Debra Wood, MS, CFP Family Resource Management Agent K State Research & Extension Central Kansas District 300 W Ash St, Box 5040 Salina, KS dwood@k state.edu